Over the past year it has set up three new companies that will, in theory, generate profits while at the same time provide services for residents.

Two of these firms have been set up to offer services such as pest control, grounds maintenance, and ‘handyperson’ jobs. The third has rather grander ambition – building homes.

Yes, the council is now a commercial developer. Waltham Forest Developments Ltd is wholly owned by the local authority and will channel any profits it makes back into the council’s housing budget. Operating in this way allows the council to dodge government borrowing limits and begin to “acquire, develop, construct and/or refurbish and operate residential homes, retail and commercial premises”.

The new company aims to build 500 homes over the next five years, ensuring that 50 percent of them will be designated ‘affordable’. And it will borrow up to £100million to make this happen. But where will the money come from? How will decisions be made? And what risk is there for taxpayers?

The council has been unusually coy about its new commercial venture so far, especially given its size and scope, so last month I requested an interview with the new managing director of Waltham Forest Developments Ltd, Paul Mawson, to find out more. I was invited to the town hall, where the council’s cabinet member for housing, Councillor Khevyn Limbajee, also sat down to chat.

“It is about delivering homes for local people,” said Paul, “but it is a commercial company and it will deliver returns back to the council in a responsible manner.”

Cllr Limbajee was keen to point out that the council was not doing anything radical by establishing a private company to build homes. “Our aspiration is to build as much as possible. We aren’t trying to do anything revolutionary. A lot of councils have set up housing companies, it is a way of maximising opportunities. Barking and Dagenham did it, Newham are doing it.”

Paul clarified that Waltham Forest was taking a less profit-driven approach, however: “Newham is just providing private sector homes with no social homes. Different authorities are doing it differently. This is about local homes for local people.”

I asked the pair how much profit they expected Waltham Forest Developments Ltd to make over its first five years. Neither could give me anything beyond a vague answer.

Paul said: “Each housing scheme that the company puts forward will be approved by the cabinet and it will have a business case and model with a profit estimate. That will be impacted by the number of homes that the company delivers. We are aspiring to achieve the affordable homes target. Anything over and above is the profit return to the council.”

Pressed for a profit estimate, something which all businesses must surely have, Paul added: “We are not talking a few hundred thousand, we are talking about more than that.”

Councillor Khevyn Limbajee, cabinet member for housing at Waltham Forest Council

One figure the council has revealed is the company’s spending power: £100m. This is the maximum that can be borrowed from the Public Works Loan Board, a government borrowing scheme for local authorities making large investments. While it seems rather contradictory that such money could be made available to councils to build on a commercial basis, rather than simply for standard social housing, this is the context in which Waltham Forest Developments Ltd has been established.

Paul explained: “Councils are permitted to borrow funds based upon a business case, at a professional interest rate. It is just government borrowing. The business plan has to be approved by the shareholder and the company can’t do anything without the shareholder’s approval. The council is completely controlling the company. There is nothing untoward here.”

As well as looking to acquire land with development potential, the new company will also be buying specific council-owned sites. Two examples of this are Hylands Road Estate in Walthamstow, where nine council homes and one private leasehold property are set to be demolished and replaced with 42 new homes, and Lena Kennedy Ballpark in Highams Park, a paved recreation space where 41 homes are proposed. The two schemes are expected to cost a combined £21.5m.

Intriguingly, Cllr Limbajee said the company could also start buying sites in adjacent boroughs: “It is early days. We have got schemes in the pipeline. We are aiming to build 500 homes in five years. Our main priority is to build in Waltham Forest but we have to explore what sort of joint working we can do [with other London boroughs] to tackle the housing crisis.”

Paul added: “In the evolution of the company, if we can create more homes in London generally and bring them back to local people, what is wrong with that?”

All decisions made by the company, insist both Paul and Cllr Limbajee, will be open to public scrutiny via the reports and meetings of a new shareholder committee, which will meet quarterly to discuss progress.

Cllr Limbajee said: “This is there to help tackle the housing crisis. That is the prism through which I look through everything. This is an innovative and dynamic company that is completely accountable.”

Paul, whose professional background includes stints in the NHS as well as the private sector, said: “I have come in with a blank sheet of paper. What does Waltham Forest need? How do I best facilitate and deliver that and tackle these needs?”

Whether or not Waltham Forest Developments Ltd is successful in answering these questions remains to be seen.

Waltham Forest Echo has been in print for nearly four years, providing high-quality local news and features each month. In order to help expand the newspaper, we are employing a part-time manager who can work to promote the paper locally, sell advertising to local businesses, and oversee distribution around the borough. They will be responsible for community engagement, ensuring the Echo is stocked in the right locations and represented at the right events.